In one line
The premium is what the contract costs, and it splits cleanly into the part that would be worth something if the contract ended right now, and the part that is worth something only because it has not ended yet.
How it works
Intrinsic value is arithmetic. A 24,000 call with the index at 24,180 has 180 points of intrinsic value, because exercising it would be worth 180 points. A 24,500 call with the index at 24,180 has none: exercising would be worth nothing, and the contract's intrinsic value is zero rather than negative, since nobody is obliged to exercise.
Everything above intrinsic value is time value, and time value is the whole of what an out-of-the-money option costs. It reflects two things at once — how long is left, and how far the market is priced to travel in that time. Both shrink towards expiry, which is why time value decays even on a session where the index closes exactly where it opened, and why the decay accelerates in the last days rather than running evenly.
At the money is where time value is largest, because that is the strike where the outcome is least settled. Deep in the money and deep out of the money it is small: one contract is nearly certain to be exercised and the other nearly certain not to be.
What it is not
A cheap premium is not a cheap contract. An out-of-the-money option that costs four points is entirely time value, so its whole price is at stake on the two questions above, and it is routine for such a contract to lose all of it. Price and value are different questions and this desk keeps them apart: what something costs is the premium; whether that cost is high or low against what the market has actually delivered is the rich-or-cheap question, and this desk tested a gauge for it and closed it.